Shareholder Ben Hoen recently attended the American Legal Financial Network (ALFN)’s 22nd Annual Conference in Beaver Creek, CO. Now, he’s sharing his top takeaways! Read below…
I attended the ALFN Answers conference where two of the hottest topics discussed were the housing and mortgage market and the future of AI in the law practice.
The outlook for the housing and mortgage markets is complex and intertwined with broader economic trends. Jobless numbers have risen for three consecutive reports, reaching 4.1%, which is typically an indicator of future new foreclosure filings. Despite the uptick in joblessness, this rate still signifies full employment according to economists, and the economy is showing signs of cooling as inflation begins to decline. However, this cooling is accompanied by indications of consumer stress, highlighted by record levels of consumer debt in credit cards, student loans, and auto loans.
Despite growing expectations that interest rate cuts may be implemented by the Feds as soon as September or December of 2024, consumer debt is rising at a record-breaking rate. The credit card sector is particularly strained, with serious delinquencies becoming more prevalent, in stark contrast to the mortgage market, which remains relatively stable. Since mortgage rates are closely tied to the 10-year treasury bonds, mortgage rates are not expected to decline quickly due to the increased issuance of bonds to cover interest payments. Despite concern that mortgage rates will not significantly decrease any time soon, a wave of defaults is not anticipated, thanks to homeowners' equity and available loan modification programs. However, rising insurance rates in certain areas are causing a slight increase in mortgage delinquencies.
Home prices continue to rise despite these challenges. This can be partly attributed to the relatively low number of foreclosures, which, at 68,000 in Q1 2024, are still below pre-pandemic levels of 81,000. The stability in the mortgage market, driven by homeowner equity and supportive loan programs, helps sustain property values. Additionally, limited housing supply and sustained demand contribute to the upward pressure on home prices. While economic indicators suggest some areas of concern, the housing market displays resilience amidst broader financial stresses.
Law firms that implement AI are experiencing significant cost savings due to various efficiencies. Internally developed AI systems are essential to ensure that sensitive data is not stored on public AI platforms, maintaining security and client confidentiality. AI also streamlines processes, such as providing real-time prompts for collectors during calls with borrowers. However, the rise in AI-driven pro se pleadings by borrowers has led to increased litigation costs to clients, presenting a new challenge for legal professionals.
The use of AI in legal research and practice raises important questions about data integrity and client confidentiality. Lawyers must ensure that the information sourced through AI is accurate and reliable. Protecting client confidences is paramount, especially as AI systems handle data that could be confidential, even if anonymized. Concerns about data control and security are reminiscent of the early days of email and cloud storage. Firms must be vigilant about what data AI systems can access and how that data is stored and used, emphasizing the need for strict security measures.
As AI technology becomes more integrated into legal practices, it is crucial to involve IT departments when seeking authorization to use AI on client data. IT professionals can address specific security concerns and ensure that AI systems do not store or reuse data improperly. Additionally, law firms should establish supervisory policies to determine the appropriate use of AI, balancing the benefits of increased efficiency with the necessity of maintaining client confidentiality and data security. Legislative and regulatory responses to AI data harvesting, particularly regarding bias, are expected, and the potential for private rights of action remains to be seen, but such measures would not be surprising.
If you have questions about the topics covered in this Weltman Insight or want to learn more about Weltman’s real estate default recovery solutions, please contact Ben at any time.
This blog is not a solicitation for business, and it is not intended to constitute legal advice on specific matters, create an attorney-client relationship or be legally binding in any way.
I attended the ALFN Answers conference where two of the hottest topics discussed were the housing and mortgage market and the future of AI in the law practice.
Housing and mortgage market:
The outlook for the housing and mortgage markets is complex and intertwined with broader economic trends. Jobless numbers have risen for three consecutive reports, reaching 4.1%, which is typically an indicator of future new foreclosure filings. Despite the uptick in joblessness, this rate still signifies full employment according to economists, and the economy is showing signs of cooling as inflation begins to decline. However, this cooling is accompanied by indications of consumer stress, highlighted by record levels of consumer debt in credit cards, student loans, and auto loans.Despite growing expectations that interest rate cuts may be implemented by the Feds as soon as September or December of 2024, consumer debt is rising at a record-breaking rate. The credit card sector is particularly strained, with serious delinquencies becoming more prevalent, in stark contrast to the mortgage market, which remains relatively stable. Since mortgage rates are closely tied to the 10-year treasury bonds, mortgage rates are not expected to decline quickly due to the increased issuance of bonds to cover interest payments. Despite concern that mortgage rates will not significantly decrease any time soon, a wave of defaults is not anticipated, thanks to homeowners' equity and available loan modification programs. However, rising insurance rates in certain areas are causing a slight increase in mortgage delinquencies.
Home prices continue to rise despite these challenges. This can be partly attributed to the relatively low number of foreclosures, which, at 68,000 in Q1 2024, are still below pre-pandemic levels of 81,000. The stability in the mortgage market, driven by homeowner equity and supportive loan programs, helps sustain property values. Additionally, limited housing supply and sustained demand contribute to the upward pressure on home prices. While economic indicators suggest some areas of concern, the housing market displays resilience amidst broader financial stresses.
The use of artificial intelligence (AI) in the law practice:
Law firms that implement AI are experiencing significant cost savings due to various efficiencies. Internally developed AI systems are essential to ensure that sensitive data is not stored on public AI platforms, maintaining security and client confidentiality. AI also streamlines processes, such as providing real-time prompts for collectors during calls with borrowers. However, the rise in AI-driven pro se pleadings by borrowers has led to increased litigation costs to clients, presenting a new challenge for legal professionals.The use of AI in legal research and practice raises important questions about data integrity and client confidentiality. Lawyers must ensure that the information sourced through AI is accurate and reliable. Protecting client confidences is paramount, especially as AI systems handle data that could be confidential, even if anonymized. Concerns about data control and security are reminiscent of the early days of email and cloud storage. Firms must be vigilant about what data AI systems can access and how that data is stored and used, emphasizing the need for strict security measures.
As AI technology becomes more integrated into legal practices, it is crucial to involve IT departments when seeking authorization to use AI on client data. IT professionals can address specific security concerns and ensure that AI systems do not store or reuse data improperly. Additionally, law firms should establish supervisory policies to determine the appropriate use of AI, balancing the benefits of increased efficiency with the necessity of maintaining client confidentiality and data security. Legislative and regulatory responses to AI data harvesting, particularly regarding bias, are expected, and the potential for private rights of action remains to be seen, but such measures would not be surprising.
If you have questions about the topics covered in this Weltman Insight or want to learn more about Weltman’s real estate default recovery solutions, please contact Ben at any time.
This blog is not a solicitation for business, and it is not intended to constitute legal advice on specific matters, create an attorney-client relationship or be legally binding in any way.
